DAILY REVIEW 20 Sep 2013

EU: The Daily candle is a below-average spread (67pips) bull spinning top with a longer upside wick closing on ultra high vol<1days which indicates bearish volume divergence. The close and spread would normally suggest a possible reversal  but the price level suggests more upside. This is so particularly as the current daily supply level at 1.3575 – 1.3600 are possible stop hunt levels for SM to start fading weak longs either for inventory re-stock or a corrective pullback before a further push up to the next daily supply levels. Of note is the 1.3575 level which is a monthly open, it is a level that may well be defended as it will be a first return to this level since 1Feb this year. Current Asia high is 1.3538 and low is 1.3527, SM will likely create buying pressure to induce longs, reverse to fade them and reverse again to test the daily supply levels. Basically SM was fading weak longs yesterday and making a re-accumulation before a further move up. We have the German elections this weekend which throws open the possibility of gap ups/downs when market reopens so it will be dicey to hold open trades. Price may also not move much because of this.

EU long levels:   1.3500, 1.3492, 1.3480, 1.3450, 1.3382  EU short levels:  1.3555, 1.3575, 1.3600, 1.3655, 1.3700, 1.3715

GU: The Daily candle is a above-average spread (127pips) bear closing just off the low on very high vol>24days. The candle close and volume suggest more downside. Price had pushed up to 1.6162 on FOMC news to test the daily supply 1.6170 – 1.6180 (confluence with 261.8% Fib Ext @ 1.6184) which is significant and if price retests and fails, we may have a full blown reversal. Breaking through today is unlikely given no significant UK news. The next supply level at 1.6360 – 1.6380 could still come into play depending on the outcome of the German elections. SM is likely to fade weak shorts before reversing to around the 1.6000 level pending the weekend results.

GU long levels: 1.6021, 1.5977  GU short levels:  1.6075, 1.6105, 1.6148, 1.6162, 1.6175, 1.6200